Credit card credit line effects on mortgage

[SwiftTone]

Hi all, I have over $60,000 in credit lines and $0 ballance. I asked a mortgage officer last year if it affects my ability to get a mortgage and she said yes because the bank assumes you can max it out any time not be able to pay the debt and loan.

Is this normal practice in the industry? Should I be closing credit cards to get a mortage. I'm not looking right now but I will in a few years.

[frugalQ]

do not close any credit cards unless your underwriter makes it a condition of approval.

[Gunnar419]

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@SwiftTone wrote:

Hi all, I have over $60,000 in credit lines and $0 ballance. I asked a mortgage officer last year if it affects my ability to get a mortgage and she said yes because the bank assumes you can max it out any time not be able to pay the debt and loan.

Is this normal practice in the industry? Should I be closing credit cards to get a mortage. I'm not looking right now but I will in a few years.

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It's not normal practice in the industry, however it's something that many people have reported they've run into. One loan officer may tell you that while another won't see a problem.

I agree that unless the UW tells you to close cards before you can be approved, you shouldn't do it.

[Anonymous]

I love the thought of buying a home but some of the things I have read makes me sick.

If I was in trouble financially the mortgage would be the first thing paid. I cant sleep in my credit cards.

[Glenn_S]

Run from that Mortgage Broker FAST!

If you shut down some of your lines of credit, you will hurt your credit score, because you will now have a smaller credit capacity. Banks are concerned about what you actually owe, rather than what you MAY spend. With your scores and that much credit paid off, you are a candidate for top rates and should fly through underwriting, unless there is something we don't know.

Most Mortgage folks have NO CLUE how credit works, it's not their skill set.

[MarineVietVet]

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@frugalQ wrote:

do not close any credit cards unless your underwriter makes it a condition of approval.

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I wouldn't do it even then.

I'd find a different lender.

But that's just me still having just a bit of "The Rebellious Child of the Sixties" left inside. 

[TRC_WA]

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@Anonymous wrote:


If I was in trouble financially the mortgage would be the first thing paid.

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Right after you maxxed out all your credit cards right? 

[SwiftTone]

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@Glenn_S wrote:

Run from that Mortgage Broker FAST!

If you shut down some of your lines of credit, you will hurt your credit score, because you will now have a smaller credit capacity. Banks are concerned about what you actually owe, rather than what you MAY spend. With your scores and that much credit paid off, you are a candidate for top rates and should fly through underwriting, unless there is something we don't know.

Most Mortgage folks have NO CLUE how credit works, it's not their skill set.

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For my case since I have a zero ballance, it wouldn't make a difference in utilization. But I agree if I had unpaid ballances.

I do have 2 auto loans totaling $12k. One will be paid off in 2 months. And I have some student loans but not alot.

I won't close my cards unless it's a condition for approval and I have no other lenders to go to. It just shocked me that she said she assumes that my cards can max out.

People work hard to be responsible and get credit as a result. Then to get a mortgage they have to jump through hoops!

Thanks all!